THE RELATIONSHIP between British politicians and the railways has long been difficult. In 1830 the grand opening ceremony of the world’s first intercity line in 1830, between Manchester and Liverpool, was somewhat marred by a former cabinet minister being hit and killed by a locomotive. Rumours this week that the government might cancel a portion of High Speed 2 (HS2), an expensive and long-planned upgrade to the rail network, has left less blood on the tracks. But it has provoked a furious reaction from business leaders and politicians, including some within the governing Conservative Party.

Until the pandemic Britain’s railways had been enjoying a multi-decade renaissance. The number of journeys more than doubled between the early 1990s and 2019, to over 1.7bn annually. In the late 2010s passenger numbers reached their highest since the early 1920s, before the era of mass car-ownership. But whereas Britain had over 32,000km of track a century ago, it now has under 16,000km.

As a result freight, long-distance journeys and shorter commuting travel have to share the same few lines. That leads to services being squeezed and delayed. The Railway Industry Association, a trade body, reckons that track use in Britain is around 60% higher than the European Union average. Network Rail, the state-owned firm that manages the track, suggests that congestion is behind 70% of all delays.

HS2, despite its name, was never really about speed. The line got its green light in 2009 and was supposed to link London and Manchester, and to open in stages between 2035 and 2041. But the core aim was to increase capacity overall, by building Britain’s first major new line since Victorian times. The idea was to release space for local services by moving intercity journeys between the capital and the Midlands and north of England to a purpose-built track. Unfortunately, the project has become a case study in how not to carry out a long-term infrastructure upgrade.

Local residents and MPs in areas subject to digging and tunnelling were quick to complain. Environmental protesters regularly forced stoppages. A labyrinthine planning system has led to more delays and rising costs. Once detailed surveys began, roughly a decade ago, the firms involved found that ground conditions were poorer than expected, so more reinforcement was needed for tunnels.

The work was originally, in 2009, expected to cost £37.5bn (then $62bn), or around 2.4% of GDP. But by 2019, the time of the last official estimate, that had risen to more than £70bn (or 3.1%). It is understood that costs are substantially higher today. The benefit-to-cost ratio was initially estimated at 2.4, meaning that for every £1 of public money spent on building the line the economy would gain £2.40. By 2019 independent analysis pointed to a ratio of just 1.3. It may now be even worse.

Ambitions have already been pared back. In 2021 an eastern leg of HS2, which would have run to Leeds, was cancelled. Earlier this year work was delayed on the supposed terminus, at Euston station in London. Trains will be expected to arrive at (and depart from) Old Oak Common, 10km away, at least initially.

More drastic cuts are now under consideration. The government has been refusing to confirm that stage two of the project, linking Birmingham to Manchester, will go ahead. Potentially, therefore, a programme that has already cost over £24bn will merely provide an improved service between Birmingham and the outskirts of London. BusinessLDN, which represents employers in London, and the Northern Powerhouse Partnership, which speaks on behalf of northern firms, say Britain’s reputation as an attractive place to invest could be left in tatters. George Osborne, a former chancellor who was fond of austerity, and Boris Johnson, a spendthrift former prime minister, have been united in opposing the rumoured change.

The case for a rethink is based on a post-pandemic re-examination of both the costs and the benefits of HS2. On the cost side, the high inflation of the last two years may have taken the overall bill to close to £100bn.

But on the benefit side, the case for creating more capacity remains. Although many commuters began working from home during the pandemic, passenger numbers have risen in seven of the past eight quarters (see chart) taking overall volumes back to 83% of pre-pandemic levels. The latest figures, for the second quarter of 2023, have (much like a British train) been subject to unforeseen delays but in April passenger numbers were 99% of pre-covid levels. Even with modest growth assumptions, and leaving aside grand plans to get more commuters to switch from cars to trains, rail capacity will be stretched to breaking-point by the early 2030s.

The opposition Labour Party, wary of being accused of having a multi-billion-pound “black hole” in their fiscal plans, is reluctant to commit itself to the project. But rail insiders believe that, whatever the government announces, HS2 will get built eventually. The alternative, they say, is a managed decline of the network, with more cancellations and higher fares to reduce volumes. They also warn that dithering by the government will lead contractors to build an extra risk premium into their fees, adding to the spiralling costs. More uncertainty, created by the government, will thus mean Britain’s pricey new railway only becomes pricier yet. ■